Competition and Collaboration in the New Environment

Assessing the Regulatory Perspective

Adam Ferguson, Eversheds LLP27 March 2014

The Office of Fair Trading’s Call for Evidence

• Issued October 2013 to gain a better understanding of how choice and competition were working in sector

• Sought views and information from interested parties

• Published Report on 14th March 2014• OFT and its successor (the Competition and

Markets Authority) have a duty to seek to promote competition for the benefit of consumers

OFT Conclusions

Key theme Conclusion

Informed student choice Good deal of information, but some gaps (e.g. employment prospects) and scope for better integration (e.g. between Unistats and UCAS websites)

Relationship between students and institutions

Concern that HEIs may be failing to meet legal obligations under consumer law to make terms accessible and fair. CMA invited to undertake compliance review.

Level and nature of competition

No complaints or evidence of collusion in respect to fee setting. Perceived tension between competition law and collaboration – but not serious enough warrant specific guidance. Complaints about restrictions on teaching institutions did not warrant investigation.

The regulatory framework Complex system of regulation at odds with system based on student choice. Lack of competitive neutrality and an exit regime. CMA to engage with government on reform.

Level and Nature of Competition – OFT findings

• Competition between HEIs increasing:– reduced direct funding – tuition fee cap increase – relaxation of limits on student recruitment – entry by alternative providers

• Scope for more competition– limited information on quality– lack of a level playing field– exit regime needed

Collaboration and competition law

• OFT acknowledges collaboration can benefit students (e.g. benchmarking, academic partnerships, sharing facilities and joint procurement)

• Competition law regime permits arrangements that may reduce competition if there are countervailing benefits

• Concerns raised about institutions not pursuing collaboration because of fears about breaching competition law

• No specific examples that would merit separate guidance, but evidence of a lack of familiarity with the rules

So where does this leave us?

The collaboration continuum

Future CMA engagement

“The [CMA] Board was updated on the findings of the recent call for information. The Board had a broad ranging discussion about this market. It agreed that this is an important market and the CMA shall maintain engagement with the sector in a focussed way to secure achievable goals.”

CMA Board Minutes, 13 February 2014

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